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Distribution by Resilient of B ordinary shares in Fortress REIT Limited
RESILIENT REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2002/016851/06)
JSE share code: RES ISIN: ZAE000209557
(Approved as a REIT by the JSE)
(“Resilient” or “the Company”)
DISTRIBUTION BY RESILIENT OF B ORDINARY SHARES IN FORTRESS REIT LIMITED
1. Unwind of shareholding in Fortress REIT Limited (“Fortress”)
Shareholders are referred to the announcement released on SENS on 7 March 2018 by Resilient and Fortress wherein
shareholders were, inter alia, advised that Resilient and Fortress were exploring alternatives to eliminate the
cross-shareholding between them. Having evaluated the various alternatives for effecting the elimination, the
Resilient board has resolved to proceed with the distribution, subject to rounding, of 169 981 600 Fortress B
ordinary shares (being 15,65% of the Fortress B shares in issue and 7,49% of all Fortress shares in issue) in the
ratio of 0,4 Fortress B shares for every Resilient share held at the close of trade on Friday, 4 May 2018 (the “record date”)
(the “proposed distribution”). The remaining approximately 5,3 million Fortress B shares, held by Resilient as a
result of rounding, will be retained and may be sold in due course.
The proposed distribution will be effected as a distribution in specie to Resilient shareholders in terms of
section 46(1)(a)(ii) of the Companies Act, 71 of 2008 (the “Companies Act”) and will take the form of a return
of capital as defined in section 1 of the Income Tax Act, 58 of 1962 (the “Income Tax Act”).
2. Salient dates and times
2018
Finalisation announcement in respect of the proposed distribution released on SENS Friday, 20 April
Last day to trade in Resilient shares in order to participate in the proposed distribution Monday, 30 April
Trading in Resilient shares ‘ex’ the entitlement to participate in the proposed
distribution commences Wednesday, 2 May
The price for fractional entitlements announced on SENS (by 11:00) Thursday, 3 May
Distribution record date (at close of trade) Friday, 4 May
Fortress B shares credited to the accounts of Resilient shareholders at their CSDP or
broker (at 09:00) Monday, 7 May
Market value of Fortress B shares for purposes of the proposed distribution announced
on SENS Monday, 7 May
Notes
1. The above dates and times are South African dates and times and are subject to amendment. Any such
amendment will be released on SENS.
2. Resilient shares may not be dematerialised or rematerialised between Wednesday, 2 May 2018 and
Friday, 4 May 2018, both days inclusive.
3. Implementation of the proposed distribution
Pursuant to the proposed distribution, Resilient shareholders will receive 0,4 Fortress B shares for every one
Resilient share held on the record date. Documents of title in respect of Resilient shares held are not required to
be surrendered in order to receive Fortress B shares pursuant to the proposed distribution.
In implementing the proposed distribution, Resilient is required by the JSE to apply the JSE’s rounding
principle. As such, if a Resilient shareholder becomes entitled to a fraction of a Fortress B share arising from
the proposed distribution, such Fortress B share will be rounded down to the nearest whole number, resulting in
the allocation of whole Fortress B shares and a cash payment for the fraction. The value of such cash payment
will be the volume-weighted average traded price of Fortress B shares less 10% on the first day Resilient shares
trade ‘ex’ the entitlement to receive the proposed distribution, being Wednesday, 2 May 2018, and will be
announced on SENS on the second day Resilient shares trade ‘ex’ the entitlement to receive the proposed
distribution, being Thursday, 3 May 2018.
The proposed distribution is conditional upon Resilient obtaining:
- exchange control approval for the proposed distribution; and
- approval from its lenders for the proposed distribution, to the extent required,
before the finalisation announcement is released on SENS.
Pursuant to the implementation of the proposed distribution, Resilient will remain compliant with its loan
covenants.
The proposed distribution is not subject to shareholder approval.
3.1. Dematerialised shareholders
Dematerialised Resilient shareholders need not take any action in order to receive the Fortress B shares to
which they are entitled pursuant to the proposed distribution. Dematerialised shareholders will receive 0,4
Fortress B shares for every one Resilient share held on the record date, credited to their CSDP or broker
account at the commencement of trade on Monday, 7 May 2018.
3.2. Certificated shareholders
Certificated Resilient shareholders are required to move their Resilient shares into the dematerialised
environment in order to take delivery of the Fortress B shares to which they are entitled.
If they have not done so on or before the record date, the Fortress B shares to which certificated
shareholders are entitled will be delivered to an account in the name of the shareholder with the transfer
secretaries, which will hold such shares in escrow for and on such shareholders’ behalf. In this regard,
certificated shareholders will be deemed to have concluded a custody agreement with the transfer
secretaries, which establishes a business relationship with the transfer secretaries in respect of the escrow
arrangement. A copy of the custody agreement is available on the transfer secretaries’ website at
www.linkmarketservices.co.za.
Should certificated shareholders wish to subsequently claim their Fortress B shares from the transfer
secretaries, they will have to complete such forms as may, from time to time, be specified by the transfer
secretaries for the purposes of stipulating a valid account with a CSDP or broker into which the Fortress
B shares are to be delivered. Upon receipt of an instruction to transfer the Fortress B shares, and upon
verifying a shareholder’s entitlement thereto, they will be delivered into the specified account.
Simultaneously with such delivery, the transfer secretaries will pay to the relevant shareholder any
amounts accrued (including dividends) in respect of the Fortress B shares while held in escrow and to
which such shareholder is entitled in accordance with the custody agreement.
Certificated shareholders are advised to open an account with a CSDP or broker as soon as possible.
Should certificated shareholders not wish to open an account with a CSDP or broker, they may, by
completing such forms as the transfer secretaries may require, instruct them to endeavour to sell the
Fortress B shares to which such shareholders are entitled and which are being held in escrow by the
transfer secretaries, and remit the proceeds of such sale (net of applicable fees, expenses, taxes and
charges) to the shareholders.
3.3. Foreign shareholders
The distribution of Fortress B shares to foreign shareholders, in terms of the proposed distribution, may
be affected by the laws of such foreign shareholders’ relevant jurisdiction. It is the responsibility of any
foreign shareholder to observe the applicable legal requirements in his/her/its relevant jurisdiction and to
satisfy him/her/itself as to the full observance of the laws of the relevant jurisdiction or territory in
connection with the proposed distribution, including obtaining requisite governmental or other consents,
observing any other requisite formalities and paying any issue, transfer costs or taxes due in such
jurisdiction or territory. In the event that foreign shareholders have any doubts in this regard, they should
consult their professional advisers. Resilient shareholders residing in the Common Monetary Area should
be eligible to receive the proposed distribution, but should consult their professional advisers in this
regard.
Any foreign shareholder who is unable to receive Fortress B shares, or any foreign shareholder that
Resilient is not permitted to distribute Fortress B shares to, on account of the laws of the jurisdiction of
that shareholder, is an “excluded shareholder” and will not receive Fortress B shares pursuant to the
proposed distribution.
The Fortress B shares to which any excluded shareholders are entitled pursuant to the proposed
distribution will be aggregated and disposed of on the JSE by the transfer secretaries on behalf of and for
the benefit of such excluded shareholders as soon as it is reasonably practicable following the proposed
distribution, at the best price that can reasonably be obtained at the time of sale. Excluded shareholders
will receive the average consideration per Fortress B share to which they were entitled (net of transaction
and currency costs) at which all excluded shareholders’ Fortress B shares were disposed of. The average
consideration will be calculated and the consideration due to each excluded shareholder will be paid only
once all shares have been disposed of.
All Resilient shareholders who are resident or whose registered addresses are in any country other than
South Africa are deemed to be excluded shareholders unless such shareholders, on or before the record
date:
- provide the transfer secretaries, either personally or through a representative or CSDP, with proof
satisfactory to the transfer secretaries and the Resilient board that they are entitled to receive the
Fortress B shares and therefore not an excluded shareholder; or
- contact the transfer secretaries to make an alternative arrangement.
CSDPs will be responsible for informing the transfer secretaries of all dematerialised shares held by them
on behalf of excluded shareholders. The transfer secretaries will determine which certificated
shareholders are excluded shareholders.
4. Exchange control
Fortress B shares will not be freely transferable from the Common Monetary Area and must be dealt with in
terms of the Exchange Control Regulations. The following summary of the Exchange Control Regulations is not
comprehensive and is intended as a guide only. In the event that shareholders have any doubts in respect of their
obligations in terms of the Exchange Control Regulations, they should consult their professional advisers.
4.1. Emigrants from the Common Monetary Area
Fortress B shares received by Resilient shareholders who are emigrants from the Common Monetary
Area and whose registered address is outside the Common Monetary Area will:
- in the case of dematerialised shareholders, be credited to their blocked share accounts at the CSDP
controlling their blocked portfolios; or
- in the case of shareholders who have rematerialised their shares such that they are evidenced by a
share certificate or other physical document of title, have their document of title endorsed “non-
resident” in terms of the Exchange Control Regulations and sent to the authorised dealer in foreign
exchange controlling their blocked assets.
The CSDP or broker will ensure that all requirements of the Exchange Control Regulations are adhered to
in respect of their clients falling into this category of investor, whether shares are held in dematerialised
or certificated form.
4.2. All other non-residents of the Common Monetary Area
Fortress B shares received by Resilient shareholders who are not residents of the Common Monetary
Area and who have never resided in the Common Monetary Area and whose registered address is outside
of the Common Monetary Area will:
- in the case of dematerialised shareholders, be credited to their share accounts at the CSDP
controlling their portfolios; or
- in the case of shareholders who have rematerialised their shares such that they are evidenced by a
share certificate or other physical document of title, be deposited with an authorised dealer in
foreign exchange in South Africa nominated by such shareholder. It will be incumbent on the
shareholder concerned to nominate the authorised dealer and to instruct the nominated authorised
dealer as to the disposal of the relevant shares. If the information regarding the authorised dealer is
not given, the Fortress B shares will be held in trust for the shareholder concerned pending the
receipt of the necessary information or instruction.
The CSDP or broker will ensure that all requirements of the Exchange Control Regulations are adhered to
in respect of their clients falling into this category of investor, whether shares are held in dematerialised
or certificated form.
5. Working capital statement
The Board is of the opinion that, after considering the effect of the proposed distribution and all reasonably
foreseeable financial circumstances of the Company:
- following the proposed distribution, the assets of the Company, as fairly valued, will equal or exceed the
liabilities of the Company, as fairly valued; and
- it appears that the Company will be able to pay its debts as they become due in the ordinary course of
business for a period of 12 months following the proposed distribution.
6. Taxation considerations relating to the proposed distribution
The summary below contains a high-level, generic discussion of the most relevant South African tax
implications applicable to South African tax residents that hold Resilient shares.
The proposed distribution will be made in reduction of the contributed tax capital of Resilient and should
constitute a “return of capital” as defined in section 1 of the Income Tax Act. The proposed distribution is
accordingly not a dividend as defined in the Income Tax Act and will therefore not attract dividends tax.
Resilient shareholders who hold their shares as capital assets will be required in terms of paragraph 76B of the
Eighth Schedule to the Income Tax Act to reduce the base cost of their Resilient shares with the amount of the
proposed distribution (which should be the market value of the Fortress B shares distributed to such
shareholders). If the amount of the return of capital exceeds the base cost of the Resilient shares in the hands of
the shareholders, the excess will constitute a capital gain in the hands of the shareholders and the shareholders
must account for capital gains tax on such capital gain, unless the shareholders can rely on a capital gains tax
exemption. Resilient shareholders who hold their shares as trading stock should obtain advice on the correct tax
treatment of the return of capital.
The market value of the Fortress B shares forming the subject matter of the proposed distribution will be
announced on SENS on Monday, 7 May 2018.
As the Fortress B shares constitute shares in a REIT, the transfer of the Fortress B shares from Resilient to the
Resilient shareholders is exempt from securities transfer tax in terms of section 8(1)(t) of the Securities Transfer
Tax Act No. 25 of 2007.
The information provided above does not constitute tax advice and shareholders are advised to obtain
appropriate advice from their professional advisers in this regard.
Resilient shares in issue at the date of declaration of the proposed distribution: 424 954 000
Resilient’s income tax reference number: 9579269144
6 April 2018
Corporate advisor and sponsor
Java Capital
Legal advisor
Cliffe Dekker Hofmeyr
Date: 06/04/2018 04:24:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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